NEW YORK, Feb 2 – A day after Incyte issued less-than-rosy forecasts for 2001, its shares tumbled nearly 20 percent Friday.
The company’s shares were down $5 1/4, at 22 5/8 in late-afternoon trading on the Nasdaq.
Separately, A.G. Edwards analysts announced they were downgrading coverage from accumulate to maintain, and ING Barings reiterated its sell rating.
The main reason for Wall Street’s sudden loss of confidence in this company, said Alan Auerbach, a senior analyst at Wells Fargo Van Kasper, is the company’s announcement in its fourth quarter conference call that it expected to post a $47 to $57 million loss in 2001.
“Going into this conference call there were a lot of investors anticipating that this was the year Incyte would say it was going to turn profitable,” said Auerbach. “These investors are clearly disappointed, and this is being reflected in the stock today.”
Another surprise that Incyte unveiled at the conference call was its decision to invest $60 million in its intellectual property and internal disease pathway and drug discovery programs this year. Auerbach said this news “shifts the story from one of short-term path to profitability to a longer-term story.”
Nevertheless, Auerbach noted that Incyte’s fourth quarter news had not fundamentally shifted his positive view of the company. “Their database is going well. Their custom genomics are going well. They do have a great asset in royalty-bearing licenses." Today’s stock dip, Auerbach said, “was just a knee-jerk reaction.”
In its fourth quarter earnings report Thursday, Incyte forecasted revenues of $220 to $240 million for 2001, and said it would look to partner with an antibody company in a target validation-drug discovery project.